Brains Brewery chief executive Scott Waddington said duty increases served to “drive people away” from pubs

The Government today refused to cut an inflation-busting tax on beer – but pledged to keep it under review.

MPs from all parties called on ministers to scrap the beer duty escalator amid fears the rising cost of a pint has led to local pubs closing and breweries going bust.

Economic Secretary Sajid Javid insisted the Treasury could not afford to ditch the duty, but his announcement to review the tax was welcomed by consumer groups and breweries.

In Wales, Brains Brewery chief executive Scott Waddington said duty increases served to “drive people away” from pubs, forcing them to close and therefore reducing revenue to the Treasury.

MPs yesterday demanded a quick end to the escalator, which was launched in 2008 by then-chancellor Alistair Darling and hikes the price of a pint by 2% above inflation.

The tax, blamed for plummeting beer sales as 16 pubs a week close, is due to last until 2014/15. Up to 5,800 pubs shut since its introduction four years ago as pints became more expensive, the Commons heard.

Mr Javid claimed that if the escalator was axed the Treasury would need to find another £35m in taxes annually or cut spending.

But he told the Commons: “We regularly monitor alcohol duties to make sure we are on top of the impact on industry and consumers.”

Conservative MP Andrew Griffiths, who chairs the all-party parliamentary group on beer, outlined the case for scrapping the escalator, claiming it would “save thousands of jobs in the first year alone and stop the closure of hundreds of pubs in all of our communities”.

He added: “This is a huge opportunity to bring balance and fairness into the duty system and to support our pubs and breweries.”

Yesterday’s backbench-led Commons debate was triggered after 104,000 people signed a Government e-petition demanding Westminster tackle the issue.

MPs heard the duty rose by a “crippling” 42% since 2008, with sales plunging 16% – the equivalent of 1.5 billion pints – depriving the Treasury of tax from lost sales.

Mr Griffiths added: “The point about an escalator is that you stop when you get to the top.

“We have reached the top of the escalator and we are in danger of going off the edge of a cliff.”

Shadow Treasury minister Cathy Jamieson said the Government should not have increased VAT, which added 5p to the price of a pub pint.

Ms Jamieson said: “This has hit pubs hard. As part of our five-point plan for jobs and growth that we set out in January we did call for a temporary cut in VAT back to 17.5% and we wanted to see that done until we could get the economy

growing strongly again.

“That would have had an impact and it would have had an effect on the price of beer in the pubs, and I hope that is something the Government will take account of when looking at whether or not they will support this motion.”

MPs passed the motion, urging the Government to carry out a review, without a vote.

Mr Waddington, chief executive of Cardiff-based Brains, said: “Strong regional brewers like Brains contribute to the local economy and are major employers and property owners, and without huge tax hikes every year we would be able to generate more local jobs and wealth in Wales.

“Further duty increases will only serve to drive people away from our pubs, force more pubs to close and therefore reduce the Treasury’s revenue.”

British Beer and Pub Association chief executive Brigid Simmonds said the appraisal would show “above-inflation increases in beer tax do not make sense”.

She added: “They bring in no additional revenue for the Treasury, but at the same time threaten pubs, employment, and our great British brewing and pub industry.

“Instead, we could be generating growth, creating jobs, and investing in a real UK success story.”

The Campaign for Real Ale’s chairman Colin Valentine said: “Passing a motion for the Government to conduct a thorough review of the economic and social impact of the escalator is a major step forward for the industry and sends out a clear message from inside Westminster that enough is enough.”